GoodDayWe had special guests at our home this week. Our cousin John* and his wife Sue* arrived from Australia. They are visiting US for a fortnight and are on a vacation. Currently they live in Sydney which needs no introduction.

Since we saw each other after a long time, we were excited and wanted to catch up. But they were fighting jet lag. So we let them rest.

They joined us for brunch this morning. Having rested well, they were brimming with enthusiasm and energy. We exchanged notes about our lives and the U.S. economy in general. Since personal finance is an integral part of a successful life, we asked them about how they managed their personal finance.

John is an information architect, and Sue a registered health care nurse. John shared that the heart of their personal finance was the simple fact of spending less than what they earned. This had helped them amass some healthy savings. After graduating, they saved like crazy for the first couple of years to pay off their education loans. Next, they saved for a year to build a reasonable emergency fund. Finally they got rid of their car loans. Now they are debt free.

Sue added that as a result of their intense focus on savings, they have few possessions and they drove second hand cars. On the other hand, some of their friends after graduating and landing their first jobs, went in for posh apartments and fancy cars. Their friends' lifestyles made them feel sad at times. But now they are thankful that they paid off their debt first. Why? Their friends are having a hard time since they are buried neck deep in debt.

Both of them have a high traffic commute every day. To facilitate independent commute and odd hours of work, they invested in two second hand cars. John said that he uses an Australian comparison site to shop for their car insurance. Combining car and home insurances and purchasing them from the same vendor helps them save money. We found that Australian insurance games are pretty akin to the ones we have in US. Also, they have shopping tools similar to those in America.

Since they are debt free, John and Sue plan to take it easy for a year. They plan to travel around the world during their vacations. Their next goal is to bolster their emergency fund. Once that is done, they plan to build a savings fund that will pay their first home's down payment. The way John and Sue have handled their finances made us feel proud.

Currently John is keeping an eye on the interest rates on home loans. He is also devoting time in understanding the Australian real estate market. He said that he found that in some parts of Australia, housing has become unaffordable. Researchers have compared similar properties in other countries, like UK, New Zealand, U.S.A, and Canada. Results indicated that Australia had the highest number of cities in which properties would come under the "severely unaffordable" category! The Sunshine Coast in Queensland is currently touted as the least affordable area. The Gold Coast and Sydney were among the top five "severely unaffordable" areas. A recent report from an international group has concluded that the housing bubble in Australia is on the brink of bursting! John added that if the employment held up, falling interest rates and grants for first time buyers could help improve the situation.

Well let's hope that things do improve. Real estate in America is not in good shape either. No one has a clue as to how long it will take to turn around. Till then we can keep our fingers crossed and hope for the best.

Meanwhile we wish this great couple all the best on their first tour of our country :).

* Names have been changed to protect the privacy of individuals.

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